I am taking an accounting class and we are being asked to comment on discussion question answers that are posted. I need some help responding to this question in a discussion format and I must have a reference. Any help you can give me would be much appreciated!

"The multiple-step income statement has three important line items: gross profit, income from operations, and net income." (Kimmel & Weygandt, 2017). It is important for a company to differentiate their income under these three categories because it gives the most accurate and simple picture of their finances. By first figuring out gross profit it shows how much money a company actually brought in from their net sales once subtracting their cost of goods. Once gross profit is known a business can subtract their operating expenses to determine what is their overall income from operations. Once this is complete, a company will either add or subtract the amount from activities not related to operations. This will then determine their net income. The three step process is further explained as follows:

"1. Subtract cost of goods sold from net sales to determine gross profit. 2. Deduct operating expenses from gross profit to determine income from operations. 3. Add or subtract the results of activities not related to operations to determine net income." (Kimmel & Weygandt, 2017).

By breaking out their income statements into this multi-step process it makes it simple for a business to determine their net income after the cost of goods and operating expenses.